Compute the NPV statistic for Project Y and tell [advise] whether the firm should accept or reject the project with the cash flows shown in the chart if the appropriate cost of capital is 12 percent. Distinguished-level: Explain how decreases in the cost of capital lead to an increase in the number of approved projects. Project Y Time 0 1 2 3 4 Cash Flow -$8,000 $3,350 $4,180 $1,520 $300

B) Compute the payback period statistic for Project A and recommend whether the firm should accept or reject the project with the cash flows shown in the chart if the maximum allowable payback is four years. Distinguished-level: If the discounted payback period were computed, identify if it would be less than, equal to, or greater than the non-discounted payback period. Project A Time 0 1 2 3 4 5 Cash Flow -$1,000 $350 $480 $520 $300 $100